U.S. PIRG Consumer Blog: Washington Post: Latest Internet scam is the old Big Con

Software used on the Internet has enabled the development of reputational rating systems based on feedback: users of sites can see what their "friends" or "similar users" are buying at Amazon and can read "ranked" reviews (How many of you found that helpful?) at many sites, can rate (or flame) comment posters at a variety of sites, and importantly, can rate and rank the sellers at either small businesses or big auction sites including EBay. This ranking has been important in increasing consumer confidence about doing business with sellers they know little, or nothing, about.

In today's Washington Post, in his story The Ol' Bait and Click, Alan Sipress reports that not only are some authors using fake "sock-puppet" identities to pump up their own books, but worse, that some EBay sellers are actually very patient scammers who may spend months selling cheap products legitimately to build up their reputation ratings. Then, they start "selling" big-ticket items that they never ship to the customer. It's a variant as old as "The Big Con" pulled off in the Paul Newman-Robert Redford classic "The Sting." Sipress reports:

John Morgan, a business professor at the University of California at Berkeley, said his research found that 526 eBay sellers posted more than 6,500 listings on the site during the second half of 2005 for low-priced or seemingly valueless items in an apparent bid to inflate their feedback reputations.

In the example in the story, an EBay merchant built up a strong reputation selling $20 memory cards, then started offering cameras for sale for $650 or more. Instead, buyers received cheap camera bags but lost their money. The story quotes Meg Whitman, EBay CEO, saying that "false positive feedback poses less of a problem than criminals who hijack the accounts of users with good reputations and then use this fake identity to prey on unsuspecting buyers." Well, based on the examples in the story by Alan Sipress, false positive feedback can still cost consumers a lot of money if used in a scam.